I looked through the 10-Q and have just no idea where you are getting the $40m income tax from. I see lilac as having a $1.4m income tax BENEFIT in the most recent quarter. Look at page 103 of the latest 10q.

Over time both the cash tax and GAAP tax amounts will be equal. From my understanding, cash taxes are determined on a current year basis, tax liabilities reflected on a company’s financial statements include both current and future year tax liabilities. If this is true, doesn´t this mean LILA will have to pay a lower cash tax amount in the future? But I´m no expert in this matter.

In general, we seek to enter into derivative instruments to protect against (i) increases in the interest rates on our variable-rate debt and (ii) foreign currency movements, particularly with respect to borrowings that are denominated in a currency other than the functional currency of the borrowing entity. In this regard, through our subsidiaries, we have entered into various derivative instruments to manage interest rate exposure and foreign currency exposure with respect to the U.S. dollar ( $ ), the euro ( € ), the British pound sterling ( £ ), the Swiss franc ( CHF ), the Chilean peso ( CLP ), the Czech koruna ( CZK ), the Hungarian forint ( HUF ), the Polish zloty ( PLN ) and the Romanian lei ( RON ). With the exception of a limited number of our foreign currency forward contracts, we do not apply hedge accounting to our derivative instruments. Accordingly, changes in the fair values of most of our derivative instruments are recorded in realized and unrealized gains or losses on derivative instruments, net, in our condensed consolidated statements of operations.

1. I think this is trading somewhere between 20-25x FCF currently.2. That is not traditionally cheap but not super expensive either considering their previous playbook and runway here3. There is growth and M&A premium built it, but how much depends on your view of interest rates/inflation/regulation in the part of the world they operate in4. Cash taxes are the correct metric to use, but not historic. Need to use estimates of future cash taxes. I believe, GAAP and cash do converge over time.5. Even if Revenues aren't hedged, most expenses are also in the same currency, so the currency exposure is actually limited to FCF to equity

Bottom line is, the investment thesis depends heavily on1) how good they are at repeating the playbook the third time over2) how long of a view you can take to wait for them to run the playbook successfully

I think by investing here, you are getting in close to the ground floor and if you can wait 5-10 years, there is a high probability this will be a big multi-bagger given the quality of the operators and business model.

The risk to equity is of course FX and regulatory stability in the countries they operate in.

Logged

You can't connect the dots looking forward you can only connect them looking backwards. So you have to trust that the dots will somehow connect in your future. You have to trust in something: your gut, destiny, life, karma, whatever. - Steve Jobs